Selecting the right life insurance policy for you and your family may seem like a tough decision, but it’s actually pretty simple once you know what you’re looking for. Financial planning for unexpected events, like being made redundant, is common practice in today’s society, so why can planning for you death practical too? The last thing anyone wants is to leave their loved ones without financial stability, especially if you’re the main breadwinner in the home.
From convertibility clauses to term life, making sense of the different life insurance policies on offer can be tricky, but once you understand what you and your family needs to cover the cost of you not being around, then the selection is narrowed down.
If you’re ever in doubt about what policy is right for you, always seek advice and guidance from an insurance specialist, and never a broker. Brokers make their money through commission, and it’s unlikely they’ll be able to give you an impartial choice. Let’s take a look at some of the best tips about buying life insurance.
Understand Your Needs
When it comes to your debts, as well as your financial needs, no one understands them better than you. This means that you, and only you, know how financial protection you’ll need if you pass away unexpectedly. To get a rough calculation of how much life insurance you are going to need, you can simply add up all your existing debt, including mortgages, car loans and credit cards – and that should be the amount of your policy.
If you want to add a little more just to pass on to your children, then that’s ok too, but it’s never the best idea to over-insure yourself. Life assurance cover can be pretty expensive, and by over-protecting yourself, you’ll be paying a lot more out than what’s coming in – and you won’t even be able to reap the benefits.
Term Insurance VS Permanent Insurance
There’s a big difference between these two types of policy, so it’s best not to get them confused. Understanding the difference will help you to make an informed decision into what policy is best for you and your family, and again, if you’re ever in doubt, seek the help and advice of an independent, impartial financial advisor.
Most term insurance policies will cover most, or all, of you existing debt, and future financial needs. Don’t pay attention to the ‘what ifs’ if you’re insurer is trying to push for higher premiums – all you actually need from your policy is what you’re financially accountable for. Term insurance is a defined contract, usually lasting for 10, 20 or 30 years. Once they expire, you can negotiate more years onto the policy.
Whole life policies are where insurance companies make their money, and they last the whole time that you’re alive. For this complete cover however, the premiums are a lot higher, but they usually cover all aspects of expected or unexpected death.